Australian (ASX) Stock Market Forum

Gold Price - Where is it heading?

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Regarding Margin:

Margin is also higher on products where their normal volatility is high. For example the DAX single contract margin is huge ($22,008)* compared to the EuroStoxx ($3,060)*, during periods of NORMAL volatility. Last years during the Sovereign debt Crisis in Europe, even the DAX's already ample margin was raised.

*These are total margin requirements

CanOz
 
Trembling Hand said:
Its standard practise. Its the rules that we all know. Margin is based on historical volatility. As moves in a contract become larger so to does the required margin. It will happen in wild markets and also as a contract goes from say $1000 to $1800. There is no secret that it will happen its on every futs exchange website,
http://www.cmegroup.com/clearing/risk-management/span-overview.html#works

What I find interesting is that bugs always bang on about how the paper gold is such a dangerous system and just wait till it collapse. But then when they go about their predefined rules to ensure that the market is stable in regards to counter party risk Bugs scream manipulation! Says a lot about the way some perceive the world... IMO.



By the way they also lifted margin on FX and gas contracts....... right on CUE! :rolleyes:
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That said, it is a known dynamic that could theoretically be exploited if commodities law did not set position limits on the larger, deeper pocketed players. Would you concede that? Commodities law came about to prevent undue market influence, that in itself acknowledges that in principal the futures market mechanism could lend itself to abuse. No?
 
Mr Z said:
That said, it is a known dynamic that could theoretically be exploited if commodities law did not set position limits on the larger, deeper pocketed players. Would you concede that? Commodities law came about to prevent undue market influence, that in itself acknowledges that in principal the futures market mechanism could lend itself to abuse. No?
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yeah sure. I'm not disputing that. I get abused every day by someone a bit bigger and with a bit more balls than myself. Though I'm not about to go all, everything thats bad is bad and everything thats good is also bad..... :eek:
 
This is where I think a lot of people have issues with the gold and silver market, the position limits seem to be a little generous for such small markets. It is also very murky as to whether they are adhered to.
 
Mr Z said:
This is where I think a lot of people have issues with the gold and silver market, the position limits seem to be a little generous for such small markets. It is also very murky as to whether they are adhered to.
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Do you mean, it depends on who (which side) is overstretched?

Lol.
 
Mr Z said:
Because you use the term 'bubble', this implies an extreme over valuation with little or no real fundamental support for the current price and that once burst it will not recover until the fundamentals have changed. This is not the case with gold, you or anybody else here can't build a case for a bubble in gold.... yet every time the price rises we get "talking head" prattle about a bubble. :rolleyes:

I feel duty bound to take pot shots at bubble mongers who can't support their claims with any sort of fundamental insight. The problem is the inability to distinguish between price an value, modern "investment" seems completely price fixated... where have the value investors gone? You know the ones that back their assessment that the market has it wrong and is under pricing an asset? Warren? Warren? Are you there???? :D
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The definition of a "bubble" courtesy of Wikipidia:

"An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is "trade in high volumes at prices that are considerably at variance with intrinsic values".[1][2][3] It could also be described as a trade in products or assets with inflated values.

While some economists deny that bubbles occur,[4][page needed] the cause of bubbles remains a challenge to those who are convinced that asset prices often deviate strongly from intrinsic values.

While many explanations have been suggested, it has been recently shown that bubbles appear even without uncertainty,[5] speculation,[6] or bounded rationality.[7] It has also been suggested that bubbles might ultimately be caused by processes of price coordination[8] or emerging social norms.[7]

Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone."

Here is the link in case you can't google it :

http://en.wikipedia.org/wiki/Economic_bubble

As far as I can see, the price of gold collapsed regardless of the reasons, overpriced, inflated value or conspiracies. I couldn't give a rats clacker. If you have lost money in gold or are exposed I sympathise for you.

I haven't swallowed any theories. I get it wrong from time to time and when I get it wrong I don't blame the market. I accept that I got it wrong then decide how long I am prepared to stay wrong.

"Every price rise is due to "irrational exuberance" ???????? Seriously? So now we have and irrationally exuberant but correct market? Isn't that some sort of oxymoron?"

Not quite sure what you are trying to say with this one. I can't see where I said "Every price rise is due to irrational exuberance". However I find it difficult to believe that anyone experienced in the market would deny that irrational exuberance often plays a role.

I also can't see where I have attacked you either, as distict from expressing an opinion, so there is no basis for the "talking Heads" or "bubble mongers" slag offs. If anything it highlights the weakness of your argument. As per the above definition I consider my comments valid, the gold price bubble popped.
 
As per the above definition I consider my comments valid, the gold price bubble popped.
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On the weekly chart it is going to be the nice shakeout, shown as a reverse hammer, we were looking for in this consolidation before the next move up.

On the chart behviour since 2002 we should see a rise now of 65% before the next correction.

Short term speculation does not work with physical gold in the hand in my view.

To the ranters and ravers, the sun will come up tomorrow so enjoy it and let the flat out paper money presses take care of where gold is headed overall and the high speed paper traders have their fun in the middle of it all too.
 
Morning Sam.... Morning Ralph....

...click goes the punch clock...

nulla nulla said:
As far as I can see, the price of gold collapsed regardless of the reasons, overpriced, inflated value or conspiracies. I couldn't give a rats clacker. If you have lost money in gold or are exposed I sympathise for you.
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That is the thing though, you are defining a bubble in a single instrument by price action alone. You simply cannot do that, bubbles divorce themselves from fundamentals or are supported by unsustainable fundamentals, you know the things that you "can't give a rats clacker about". In order to identify a bubble you really do have to "give a rats clacker" as to why things are as they are. This run up and correction in price is not atypical of any instrument in a long term bull market.

Thanks for the feined sympathy but it is really not required. :D :rolleyes:

nulla nulla said:
I haven't swallowed any theories. I get it wrong from time to time and when I get it wrong I don't blame the market. I accept that I got it wrong then decide how long I am prepared to stay wrong.
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Who is blaming the market? I keep trying to tell you this is within norms for gold and was not unexpected, seriously guys like Jim Rogers have been saying it in interviews for the last two years! Yet he is is still bullish, you know Jim don't you, Soro's partner in the good old days when a hedge fund was an exotic beast run by people who could actually run one properly!

nulla nulla said:
Not quite sure what you are trying to say with this one. I can't see where I said "Every price rise is due to irrational exuberance". However I find it difficult to believe that anyone experienced in the market would deny that irrational exuberance often plays a role.
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You need to look at what you wrote, this is what YOU inferred. Of course I don't believe that! Irrational exuberance is just Alan's way of saying that he thinks that the market has it WRONG! By your statement above it seems plain that on some level you understand that the market gets it wrong at times. Why you don't seem to acknowledge that "irrational pessimism" is also a feature of the market I can't fathom. Maybe, just maybe, it pays to do the leg work and actually UNDERSTAND the instrument you are trading. Don't get me wrong, I am a technical trader (my investing is a different story) and while I respect price signals I do go looking further to find out why what is happening is happening.

nulla nulla said:
I also can't see where I have attacked you either, as distict from expressing an opinion, so there is no basis for the "talking Heads" or "bubble mongers" slag offs. If anything it highlights the weakness of your argument. As per the above definition I consider my comments valid, the gold price bubble popped.
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Talking heads is a generic term for our esteemed financial news presenters, also known as "blow drys" in the US. They are the "bubble mongers" that laughingly will call bubble on everything but the things that are most probably in a bubble. If I had mean't you I would have said YOU are... yadda... yadda.

Your comments are without basis until you postulate a theory as to why a bubble existed in the first place! No bubble no pop! A 26% retracement is no where near a pop, if we had 70, 80, 90% then maybe you would have an argument but then you still need to work out why it occurred. Granted with those levels of price drop the whys should be obvious to blind Freddy, but then that is the point, the fundamental flaws are always obvious to blind Freddy post bubble YET you have not even attempted to point out why there may have been a bubble in the first place.

So tell me why gold is divorced from its fundamental drivers? Until you can answer that question there is no basis for a bubble call. Notice the flood of people telling why it is/was in a bubble?... anyone... anyone?

Oh yeah and 2K.... conservative to say the least ... if gold goes by its past patterns, which it pretty well is now, it will end the next major rally circa 4K..... but that is a purely technical projection given past data, it could always get "irrational" :D
 
baby_swallow said:
A very interesting article from a non-mainstream economist.
Who and why they crash the gold....

http://www.24hgold.com/english/news...direct=false&contributor=Chris+Martenson&mk=1
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Good article baby swallow. A lot of the content has been repeated in the Australian press as well. It just goes to show what the big banks/trading houses can do when they decide it is time to boost their profits and bonuses.

I was surprised to see the finger pointed at "robots" as the means of executing the rapid sell off. But then it also makes sense when they talk about the number of trades that needed to be executed in the tight time frame to cut through the bidders and trigger more stop loss sell offs. Someone has obviously put a lot of time and money into developing the necessary programming. You wonder if the Sunday action was a test run for the bigger sell down on Thursday/Friday.

The timing, on the Sunday sell down, while most people were "off screen" is similar to some action on the equity markets last year. Some brokers initiated sell downs during the lunch hours trying to sell through the stop losses of other brokers that were typically out to lunch. The triggered automated stoploss sell offs dropping the prices further and the original sellers buying back in at a lower average price.

It will be interesting to see if anyone is prepared to bet against the big banks and start pushing the price upwards or if gold will plateau at the current levels.
 
nulla nulla said:
You wonder if the Sunday action was a test run for the bigger sell down on Thursday/Friday.
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The odds favor that, the HUI is leading that action. We need to see USDX ~ 85 before we are in the clear and I suspect the low will come just prior to that event if my hypothesis is correct.

nulla nulla said:
It will be interesting to see if anyone is prepared to bet against the big banks and start pushing the price upwards or if gold will plateau at the current levels.
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Futures don't really lend themselves to plateauing, these short positions need to be covered, sellers will turn buyers and I suspect it will be done under the cover of a stronger USD and a correcting Dow in an effort to mute the reaction rally.

So far this has been done artfully, it will be really interesting to see how skillfully it is closed out. These guys are to be respected, they know what they are doing when it comes to achieving short term objectives.
 
nulla nulla said:
It will be interesting to see if anyone is prepared to bet against the big banks and start pushing the price upwards or if gold will plateau at the current levels.
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I don't think it matters, they will be among the first to start going long as soon as they feel the markets changing (wouldn't surprise me if they have started already). In a volatile market, if can pick the peaks and trough (better yet create them but I will not go there) you cash in. The more this happens the more you make. It is essentially a transfer of wealth as per the article.
 

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